Eight things we must do to beat poverty
Gone are the days when developing countries - what used to be called the ‘third world' - were consigned to perpetual victim status. All of the latest research points to the following conclusion: countries can choose to overcome poverty. It is a hard choice to be sure, involving everyone. It is not the path of least resistance. But it is possible.
One of the most recent and authoritative examples is the International Growth and Development Commission's Growth Report which studied the 13 so-called "miracle" countries [1] that have sustained high growth (defined at 7% or more) for 25 years or longer.
The Commission found that fast, sustained growth is possible for developing countries, as long as their leaders are committed to achieving it and taking advantage of the opportunities provided by the global economy.
This is a welcome departure from the hand-wringing and victimhood that has often characterised discussions of poverty in Africa. It is deeply inspiring to all of us who want to prove the Afro-pessimists wrong about our country and our continent.
It is encouraging, too, that these ideas are beginning to take root in national government. President Zuma and Finance Minister Pravin Gordhan have both recently begun talking of achieving the growth target of 7%. Also encouraging is the emerging consensus that accelerating economic growth is a key (if insufficient) condition if we are to win the war on poverty.
The question is: how do we do it?
Today I would like to list some of the key things we must do if we are to increase growth. If we do them, I believe we will make enormous strides in beating mass poverty within a generation.
1. Defend the Constitution
Without a working Constitution that limits power abuse, we are destined to embark on the same path as the many failed states on our continent. States fail because they are turned into a vehicle for the enrichment of the cronies at the top instead of a vehicle for the development of all citizens. Whether you call it the predatory state, the vampire state or the parasitic state, it is a state in which your chances in life are determined by your links to the political power brokers. And the overall result is the same: the collapse of the economy and deep poverty for millions of people for decades to come.
2. Stop Corruption
Stopping corruption is not as difficult as the ANC makes out. It is more often a question of political will than policy. If the ANC was serious about rooting out corruption, it would shut down its funding arm Chancellor House, it would end its policy of cadre deployment, it would order a Judicial Commission of Inquiry into the Arms Deal and it would not have nominated Jacob Zuma its presidential candidate until he had stood trial. And it would follow the example of the DA in the Western Cape by passing a law to prohibit public servants doing business with the state.
3. Prioritise Education
A Newsweek magazine survey this month ranked our education system 97th out of the 100 countries surveyed. We were ranked lower than countries like Mozambique, Bangladesh and Iran - countries that are less wealthy, that spend less on education and where citizens enjoy fewer constitutional rights than ours.
The answer does not lie in throwing more money at education. It lies in what Ann Bernstein calls "militant intervention." As she notes: "Leadership, incentives for performance and penalties for lack of delivery, effective support for teachers - can increase the scores of poor learners 20 to 30 percent within three to five years."
We agree. This is why, in the Western Cape where the DA governs, we are now introducing performance contracts in order to hold principals and deputy principals accountable for learner outcomes. Senior officials are also on terms with performance contracts linked to our targeted outcomes. This will form the basis of a differentiated performance management system. We are determined to move towards a situation where poor performers are managed out of the system, and excellence is rewarded. In teaching - more than any other profession - one size does not fit all.
4. Review the Social Welfare System
It is a great irony that South Africa is the most redistributive state in the developing world but also one of the most unequal. And the more we redistribute through the fiscus, the more we seem to entrench this inequality.
The problem is that the poor have been locked into poverty. Instead of tackling the root of the problem, it merely treats the symptoms. Dr Mamphela Ramphele made the following observations about this approach in yesterday's Sunday Times. She said:
"[It] is turning citizens who should be holding government accountable into supplicants and recipients of government hand-outs. The resultant dependency syndrome fosters a vicious cycle of dependence by political elites on the dependency of the electorate."
Before anyone misinterprets my position let me make it clear: The DA supports a social safety net of grants to alleviate extreme deprivation and enable people to take the next step out of poverty. But we have to couple this with drawing more and more people into the productive economy, where they can earn an income, lead lives they value, care for their families and contribute to society. Most people want to do this, and a key role of the state must be to facilitate the achievement of this outcome.
We need to encourage and empower people to seize the opportunities made available to them instead of choosing a lifetime of impoverished dependency.
5. Instill a Culture of Personal Responsibility
As mentioned earlier, the Constitution protects citizens from the arbitrary and excessive use of power. This right-based culture is at the very heart of our democracy.
But, as they say, every action has a reaction. The extreme abuse of rights under apartheid led to the pendulum swinging the other way. We have now emphasized rights to the exclusion of another crucial concept on which democracy and progress depend: the ethos of personal responsibility.
We must get the balance right.
The lack of personal responsibility contributes to some of the greatest social problems we face. HIV/Aids, alcoholism, drug abuse, teenage pregnancy, foetal alcohol syndrome, and absentee fathers who don't pay maintenance. Social pathologies are complex, but I think we must all agree that promoting a culture of personal responsibility is essential to addressing all these things.
6. Ensure Sound Macro-Economic Fundamentals
If we are to succeed in growing our economy, we need to manage it properly. And this means ensuring that we have the macro-economic fundamentals in place - low inflation and a well managed fiscus.
The recent public sector strike has brought into sharp relief what can happen when a government allows itself to be held hostage by unions. The entire economy - and the well-being of all (including workers, but particularly the unemployed) is threatened. It is clearly untenable to meet demands for public sector wage increases that amount to almost three times the inflation rate.
The real tragedy is that the battle between government and the unions is not primarily about wages - that is a mere proxy for the broader power struggle within the tripartite alliance. Workers (many of whom do have legitimate grievances over pay especially in the context of profligate self-enrichment by the political elite) are mere pawns in this game. It is primarily about politics.
This explains why two of the biggest unions, Sadtu and Nehawu, pre-empted the latest round of wage negotiations by rejecting the offer out of hand -- before negotiations were even concluded.
As it is, the 7.5% wage offer which is currently on the table would come at a cost to the public purse of around R7 billion. Nobody quite knows how government will pay for this, and nobody in government or organized labour seems to have calculated the real costs of this increase.
The fiscus is already strained and our budget deficit, which stood at 7.3% in this year's budget, is now likely to widen further next year. The money will have to be found elsewhere which means either sourcing money from other budget allocations such as those for essential basic services, raising taxes (thereby suppressing growth further), or going deeper into debt and passing on the costs to future generations. It is also likely to lead to lay-offs as government departments strain under the weight of the increased wage bill.
7. Embark on an Aggressive Job Creation strategy
Nearly five and a half million South Africans of working age are unemployed. Their hopes of finding work are dashed by the inflexible labour regime, which militates against job creation. The unions are hell-bent on preventing a "two-tier" labour system which would effectively open the door to a mass based "apprenticeship scheme" and enable first time workers to enter the economy and gain the necessary skills and experience. This would require a more flexible working environment - with respect to minimum wages and other bureaucratic procedures -- as long as the safety of workers was not compromised.
Currently, these first-time job seekers are locked out of the economy by the inflexibility some unions are determined to retain. There is nothing more empowering for any individual than getting a job. The longer people are out of work, the more likely they are to turn to drugs and alcohol to escape and the more unemployable they become. This is the vicious cycle of dependency we have to break.
How can we do this?
We need to start by changing the way we think about jobs. Earning a low starting wage is better than remaining permanently unemployed. As experience in high-growth economies shows, the economic growth that comes from lowering the cost of hiring eventually enables wages to rise, so that equilibrium is reached. This is the virtuous cycle we must put in motion. We cannot remain trapped where we are.
This should not be interpreted as a threat to those who are currently employed. The idea is to get people who are currently out of work into gainful employment. It is not a zero-sum game.
The DA has a comprehensive job creation policy which, besides measures such as encouraging entrepreneurship and introducing more flexible labour legislation, involves subsidising businesses that employ young, first-time job-seekers. We also believe that the time is ripe to create what we call ‘job zones' - areas where companies can set up a business and be exempt from costs like company taxes, tariffs, and all but the most basic labour, health and safety laws.
8. Voters must exercise their right to change their mind
Just because poverty has defined Africa's recent past, does not mean that poverty must determine our future. Poverty can be avoided. It is the result of bad or self-interested policy choices - decisions that can all be reversed if politicians summon the political will to do so.
But in a democracy, it is up to voters to decide whether government's policies are working. Voters have the power; they get the government they deserve. When people don't punish their leaders at the polls for corruption, or self-enriching policy choices, their leaders punish them. The greatest political challenge we have in South Africa is to ensure that voters' choices are not based on race, but on alternative policy choices for the future.
There are encouraging signs that we are beginning to break through the racial barrier and draw votes across the spectrum, based on our policies and track record. Since the election last year, the DA has won eight seats off the ANC. And, even in places where we haven't won seats, the indications are that we are making inroads into the ANC's traditional constituency.
This tells us that more and more people who have always loyally voted for the ANC now realise that the ANC does not own them. They understand that they have the right to change their mind. Voters who exercise this right drive development and progress.
Ultimately, it is they who will decide whether we beat poverty or not.
Ref:
[1] Botswana, Brazil, China, Hong Kong, Indonesia, Japan, Republic of Korea, Malaysia, Oman, Singapore, Taiwan and Thailand.
This article by Helen Zille first appeared in SA Today, the weekly online newsletter of the leader of the Democratic Alliance, September 6 2010
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